Final WOTUS Rule a Blow to Housing Affordability
In a blow to housing affordability and regulatory certainty for builders and other stakeholders, today the Biden administration established final regulations that will dramatically expand the definition of “waters of the United States” (WOTUS) under the Clean Water Act (CWA), even as the U.S. Supreme Court has yet to decide on the legality of key aspects of the rule.
“Rather than providing clarity and certainty for home builders and other affected stakeholders, this definition of WOTUS adds uncertainty and confusion to the regulatory process, raises housing costs and drastically increases federal overreach in the process,” said NAHB Chairman Jerry Konter.
Regrettably, the final rule continues to rely upon a confusing and legally flawed theory of CWA federal jurisdiction known as the “significant nexus test” to potentially assert federal control over most isolated wetlands and ephemeral streams impacting numerous activities, including home building.
In practice, the significant nexus test has proven extremely difficult to apply consistently in the field, leaving developers and builders unable to discern for themselves which isolated wetlands, ephemeral streams, or even human-made drainage features, like roadside ditches, are federally jurisdictional under the CWA.
NAHB believes the decision by the U.S. Environmental Protection Agency (EPA) and the Army Corps of Engineers (Corps) to finalize today’s WOTUS definition is counterproductive and shortsighted, especially since the Supreme Court’s upcoming ruling under Sackett v. EPA is squarely focused on the legality of the significant nexus test, which is a critical part of the final rule.
The new WOTUS rule radically extends the areas in which home builders are required to get federal permits will result in continued regulatory barriers to affordable housing as single-family and multifamily developers struggle to find the developable land necessary to produce the new affordable housing units this nation desperately needs. In short, the rule will generate bureaucratic and project delays, and raise housing costs at a time when the nation is already experiencing a housing affordability crisis.
Moreover, the final rule’s continued reliance upon the significant nexus test when determining CWA jurisdiction over otherwise isolated and ephemeral features prevents states and local governments from acting as co-regulators, as intended by Congress when the CWA was drafted more than 40 years ago. And not only does the significant nexus test go well beyond the limits of federal jurisdiction set forth previously by the Supreme Court, it also results in duplicative and even conflicting wetlands requirements at the federal, state and local levels of government.
“The Biden administration has declared a housing affordability crisis, but if the administration is truly interested in knocking down barriers to affordable housing, it will direct the EPA and Corps to keep from implementing this rule until the Supreme Court issues its ruling in the Sackett case,” said Konter.
Latest from NAHBNow
Jun 24, 2026
NAHB Statement on President Trump Canceling Signing of Housing BillNAHB Chairman Bill Owens issued the following statement after President Trump canceled his plan to sign landmark housing legislation today.
Jun 24, 2026
Affordability Concerns Push New Home Sales Lower in MaySales of newly built single-family homes fell 7.3% in May to a seasonally adjusted annual rate of 580,000, according to newly released data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. The pace of new home sales is down 6.8% from a year earlier.
Latest Economic News
Jun 24, 2026
Sawmill Output Slips as Capacity Continues to DeclineU.S. sawmill production fell in the first quarter, the second consecutive quarter of lower output according to the Federal Reserve G.17 Industrial Production report. Sawmill output has remained largely flat since 2023, after increasing in the post-pandemic period.
Jun 23, 2026
State-Level Employment Situation: May 2026State labor market conditions remained mixed in May, with payrolls expanding in many states while job losses were concentrated in a smaller group of states and the District of Columbia (D.C.). Construction employment also continued to grow nationwide, although performance varied considerably across states.
Jun 22, 2026
Structural Demand Outpacing Supply: Jobs-to-Permits Ratios Highlight Housing GapStrong labor market growth continued to put pressure on the nation’s housing supply in 2024, as home building activity did not fully keep pace with demand driven by job gains. Comparing net new jobs with prior-year permitting activity helps show whether the pace of housing construction is keeping up with potential household formation and broader economic growth.